Property prices through the roof

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Christchurch's average house value is about to hit $400,000 for the first time after two years of earthquake-fuelled inflation.

Sales-based calculations from state-owned valuer Quotable Value (QV) show homes in the city were worth an average of $397,797 in October, a record and almost 6 per cent up on a year ago.

Values rose even in the quake-hit eastern suburbs, by 4.1 per cent. In Christchurch's less badly damaged west, values shot up by 7.8 per cent, and there was an increase of 8.9 per cent in the Port Hills.

Website realestate.co.nz said the average asking price for Canterbury homes listed on its website over the same period was $414,070 - the first time it has passed $400,000 and up 13 per cent on a year ago.

Ray White agent Maxine Jones said that while plenty of talk was about rising prices on the west side of town,many red-zoned residents were keen to stay in the east.

"They want to stay near family and friends, near the beach or the golf courses.

"With Bexley gone, and parts of Southshore and South Brighton, there's less land available and still a lot of people that want to live out here. It can only become more desirable."

Jones said that eastern suburb buyers were on the lookout for homes on less damage-prone TC1 and TC2 land, leaving TC3 properties harder to sell.

Local real estate institute head Tony McPherson said homes right across the city were in strong demand, and rising rents and low interest rates were pushing up interest from first-time buyers.

People building new houses in subdivisions were in many cases selling their existing homes to red-zoners, McPherson said.

"A lot of people [red-zoners] want to live reasonably close to where they were before. A lot of them just want to get a house and get on with it, without having to go through the building process."

Success in selling TC3 properties was on a "case-by-case basis" according to damage and desirability, he said.

TC3 homes made up 20 per cent of the city's housing stock and now accounted for 11 per cent of sales.

Daryl Taggart of QV said house values in the city as a whole had risen by 1.8 per cent in the past three months alone.

Competition for properties in the $300,000-to-$400,000 bracket was pushing up prices at auctions, he said. Sections in the city's big subdivisions were selling well, and he expected sustained demand.

Real estate group Harcourts reports a shortage of homes available for househunters, with strong competition from cashed-up red-zoners.

Despite a surge in spring listings, the city's market still favoured sellers over buyers, said Paul McKenzie of realestate.co.nz.

House prices have been rising steadily since the beginning of last year, boosted by surges in demand with every batch of red-zoning.

Even before the quakes, prices were being held up by a growing shortage, with house construction at its lowest level for decades. Construction in the region has regained some ground and is now at its highest level for five years.

QV figures show Canterbury house values have risen most sharply in the heated markets surrounding the city in the past year, especially in the Selwyn, Waimakariri and Ashburton districts with rises of 12.5 per cent, 12 per cent and 11.9 per cent respectively.